What we must do to reduce the cost of poverty

Reducing poverty will pay dividends long into the future

Saturday, May 19, 2018


Many Canadians hold the view that our society cannot afford the cost of reducing poverty.  But a growing body of serious research on the subject is telling a very different story.  

The truth is that we can’t afford to ignore the costs of poverty. As shown by an economic analysis carried out a few years ago and since demonstrated through numerous studies, not only does poverty have negative effects on the health and wellbeing of those who directly experience it, but it affects the pocketbooks of all of us. The financial costs of poverty, both direct and indirect, carry impacts for many basic community services, including health care, education, social services, policing, and corrections.    As a result of these impacts, it has been estimated that every household in Ontario pays a minimum of $2,300 (2008 dollars) per year to cover the costs of poverty –  and that number doesn’t include the cost of welfare and social housing.

As well, a most significant long-term effect of poverty is intergenerational: by a wide margin, the children of poor families often grow up to become poor adults. 

The Liberal government at Queen’s Park has long understood that there is no magic bullet for reducing poverty in Ontario. That’s why, beginning in 2008, the government has pursued a broadly scoped Poverty Reduction Strategy that is based on the vision that every Ontarian should have the opportunity to achieve their full potential and to contribute to a prosperous and healthy province. The strategy recognizes that helping Ontarians realize their potential in a changing economy means addressing the symptoms and causes of poverty at all stages of life.  Through annual accountability reports, the strategy has confirmed significant success in meeting its goals of reducing child poverty, helping poor families realize adequate incomes, addressing chronic homelessness, and breaking down the systemic barriers that prevent some groups from rising up the economic ladder.

The sections below describe the key elements and outcomes of the Liberals’ Poverty Reduction Strategy.

Achieving adequate living standards:   

An abundance of research has shown that ensuring the financial means to cover basic needs for food, housing, clothing and other essentials of daily life is one of the most powerful ways to improve the health and wellbeing of our communities. The Poverty Reduction Strategy responds to this insight through a variety of measures.   For instance, The Ontario Child Benefit (OCB) is a tax-free amount paid to help low- to moderate-income families provide for their children. It is currently benefitting about one million children in over 500,000 families. With similar success, the Ontario Electricity Support Program has seen a 50% increase in the amount of financial assistance available to poor households to help pay their electricity bills.  Because of these and other new government initiatives to improve income security for poor families, the most recent data shows that in 2015 almost 25% fewer Ontario children were living in poverty as compared with just three years previously. 

Also key to ensuring incomes are adequate is the provincially-regulated minimum wage, which, as of January 1 of this year was raised to $14 per hour and will increase to $15 per hour at the beginning of next year. Mind you, no one is going to get rich or experience a loss of motivation because they’re being paid $15 an hour – at that rate, a person working at a full-time job of 35 hours per week will be receiving just $26,250.  At the same time, because low income earners tend to spend locally on fresh produce, milk and the like, the benefits of low income earners having more money to spend will flow to the community at large.

Achieving better health status for low income families: 

In the words of former Toronto Medical Officer of Health, Dr. David McKeown, “Reducing poverty is the best medicine money can buy…poverty is a debilitating condition that robs you of quality of life and shaves years off your life expectancy.” Dr. McKeown might also have added that not being able to afford essential health services that have traditionally not been covered by OHIP – such as dental care and prescription medicines -- will aggravate the effect of just being poor on an individual’s health status, life expectancy, and loss of intergenerational opportunity. This is why an important feature of the Liberal government’s fight against poverty in Ontario involves a package of measures to greatly improve access to vital health services, including free prescription drugs for children and youth under the age of 25, elimination of the annual deductible and co-payments for seniors whose drugs are paid for by the Ontario Drug Program,  and extension of drug and dental insurance for individuals who do not have coverage from a workplace extended health plan.

More care for children: 

Today, access to affordable, quality child care is essential for families. This is true for everyone with kids, but it is also an enormous challenge for parents who are poverty-stricken and are looking to improve their financial circumstances through employment. Ontario’s Liberal government understands the critical importance of this need – for kids, parents and the economy as a whole. To this end, the full-day kindergarten program was introduced in 2013 and is currently serving over 260,000 four- and five-year-olds. Full-day kindergarten provides a robust foundation for social, emotional, and cognitive development and also helps parents balance work and caregiving responsibilities as well as save on child care expenses.

For younger children, the government has each year increased funding to expand the capacity of Ontario’s licensed child care system and increase the number of low and middle-income families who receive child care subsidies.  Right here in Waterloo Region, the results of these efforts have been seen in the elimination of the fee subsidy waitlist of 272 children and the creation of 200 more licensed spaces for children aged zero to four.    

But we’re not there yet, which is the reason why the recent Liberal budget included capital funding to create 45,000 new child care spaces.  The budget also announced a 20% increase in the number of children who will be receiving child care subsidies this year.

Escaping the poverty trap through learning: 

The surest route out of poverty lies through quality education that starts at the pre-school level and ends at post-secondary education.  While no one stage in the learning process can be singled out as most important, there is clear evidence that those who are able to attend and complete postsecondary studies earn the best chances at achieving satisfying employment and long-term financial security. Yet, for young people from poor families, cost and the prospect of incurring crippling amounts of student debt have stood as daunting obstacles to achieving the permanent escape from poverty that postsecondary education can provide. 

A student’s access to learning should not be based on their ability to pay. That is neither fair, nor is it good for our economy at a time when workplace requirements for skills and knowledge are ever-changing and ever more demanding.

The Liberal government has responded to this need by revamping support for postsecondary tuition. As a result, two out of every three full-time students in public institutions are receiving or will receive financial assistance this year; of those who receive assistance, three-quarters attending a college program have free tuition and half of the full-time university students have free tuition. In short, the cost barrier to postsecondary education for children and youth from poor families has come down dramatically. 

Ending homelessness and investing in affordable housing:  

This is one of the most ambitious goals of the Poverty Reduction Strategy.  What makes it particularly challenging is that there are many different types of homelessness, arising from a variety of causes, and affecting different population groups.  Just to name a few of these, there is chronic homelessness, youth homelessness and the housing needs of people transitioning out of provincially funded institutions and service systems, such as correctional facilities, hospitals, child welfare and youth justice systems, and shelters for women who have experienced violence. 

As a complex public policy issue, eliminating homelessness requires collaboration with a variety of stakeholders and partners to identify systems-level solutions, as well as solutions tailored to the needs of specific communities and population groups. An example of this is the Community Homelessness Prevention Initiative, which supports local communities to address homelessness through proactive and permanent solutions.  In 2016-17, this program helped approximately 32,300 households experiencing homelessness to obtain housing, and about 125,500 households at risk of homelessness to remain in their homes. Another example of a targeted housing initiative introduced by the Liberal government for delivery at the local level is the Strong Communities Rent Supplement Program, which provides long-term rent supplement funding to assist clients on or eligible to be on social housing waiting lists – it assisted 6,500 households in 2016.  And other components of Ontario’s Fair Housing Plan are helping more people find affordable homes, increasing the supply of housing, protecting buyers and renters and, more generally, helping to bring stability to the real estate market. 

The Poverty Reduction Strategy has also incorporated a process to measure progress on the target to end chronic homelessness in Ontario by 2025. Beginning this year, local homeless enumeration is planned to be carried out annually. The enumeration will provide essential data on the scope of homelessness in communities across the province for the purpose of both measuring of the results of the effort to end homelessness and driving future progress.   

Final words

Is it too ambitious to think that we can end poverty in our community and our province?  Of course.  But just imagine what it would mean if we could reduce the proportion of Ontarians living in poverty by just two percentage points. The financial savings and social benefits for all of us would be enormous, and would pay dividends long into the future.  

I believe that if we continue to build on the directions already in place in the fight against poverty, Ontario will have a good chance of meeting these goals – and more.


Dorothy McCabe
Waterloo - Ontario Liberal Party